Bruton's tyrosine kinase (BTK) plays an important role in B cell development. Deletion of C-terminal 14 amino acids of the SH3 domain of BTK results in X-linked agammaglobulinemia (XLA), an inherited disease. We report here on the stability and folding of SH3 domain of BTK. Peptides corresponding to residues 216-273 (58 residues) and 216-259 (44 residues) of BTK SH3 domain were synthesized by solid phase methods; the first peptide constitutes the entire SH3 domain of BTK while the latter peptide lacks 14 amino acid residues of the C-terminal. The 58 amino acid peptide forms mainly a beta-barrel type folding unit. Although small and lacking disulfide bonds, this peptide is extremely stable to thermal denaturation. Based on circular dichroism measurements, its melting temperature was found to be high, 82 degrees C at pH 6.0. However, the Gibbs free energy (delta GH2O) of the intrinsic stability and thermodynamic spontaneity of unfolding were found to be low, 2.6 kcal/mol by Gdn.HCl denaturation experiments, as compared to 12 kcal/mol obtained for larger single domain proteins, indicating poor stability of SH3 domain. Addition of 500 mM of Na2SO4 increased the free energy change delta GH2O to 4.0 kcal/mol, suggesting an ionic strength effect. The truncated peptide fails to fold correctly and adopts random coil conformation in contrast to 58 amino acid beta-barrel peptide, which exhibits high thermal stability but normal or low stability at ambient temperature. These results, to our knowledge the first to delineate the importance of C-terminal in structural integrity of SH3 domains, indicate also that improper folding and/or poor stability of mutant SH3 domain in BTK likely causes XLA.